Published: Monday, July 22, 2013 at 3:14 p.m.

Last Modified: Monday, July 22, 2013 at 3:14 p.m.

Energy policy changes across the Atlantic could affect how long the boom in the U.S. wood pellet industry will last, forestry experts and industry opponents say.

But the company that plans to invest millions into building a pellet-exporting facility at the Port of Wilmington says those changes were long anticipated and have provided certainty for the industry to continue rapid growth.

The United Kingdom, where North Carolina's pellets will be shipped, is changing some of its rules that favor use of pellets in place of coal. It is cutting out subsidies for new power plants that would burn pellets while eventually ending them for plants that are converting from coal to pellets, according to news reports.

The U.K.'s decisions "give certainty to the major utilities there so they can make good investments in converting existing coal-fired plants to biomass (wood products) plants," Enviva Chairman and CEO John Keppler said Monday.

"We have some pretty aggressive plans under way" for the Port of Wilmington and elsewhere in North Carolina, he said.

Enviva has two pellet-producing facilities in North Carolina, at Ahoskie and Northhampton, and has identified several sites in the state for a possible third facility, Keppler said.

Enviva plans to build two concrete storage domes, rail and truck unloading stations and a ship loader/dock-conveyer system at Wilmington. Enviva is not involved in pellet-exporting plans at the Port of Morehead City, which have been scaled back. The cutback is unrelated to European environmental policies, said Laura Blair, spokeswoman for the N.C. State Ports Authority.

U.S. production of pellets is expected to increase from 3 million tons in 2009 to 10 million by 2015, according to a study by Daniel Saloni of the Department of Forest Biomaterials at N.C. State University.

There are or will be six Atlantic ports handling wood pellets between Norfolk and Brunswick, Ga., according to the Southern Environmental Law Center, an environmental advocacy organization based in Charlottesville, Va.

Pascagoula, Miss., is joining the push, planning to spend $30 million to accommodate future pellet exports.

Viable business?

But some question the limits of the wood-pellet export boom.

Opponents of the industry are arguing that burning wood pellets to produce energy not only doesn't make environmental sense but that it eventually won't make economic sense, either.

In addition to the U.K.'s new biomass subsidy policy, Europe is looking at whether it will require stricter requirements that the wood it receives from the United States is third-party-certified as sustainable, according to Dennis Hazel, associate professor and extension specialist for the Department of Forestry and Environmental Resources at N.C. State University.

One of the largest certifying groups is the Forest Stewardship Council, which originated from the Rain Forest Alliance, Hazel said.

"If your forest is certified, every product" that comes from it is certified, including pellets, he said Monday.

Problem is, there is little third-party-certified land in North Carolina, Hazel said.

If Europe decides to require strict certification, it may cloud the long-term viability of the pellet industry in the state, he said.

Lack of certification by either independent or industry groups is not to say the state's forests are managed badly.

The U.S. Forestry Service thinks "we do forestry pretty well in the Southeast. Most of our land is adequately regenerated" after trees are cut, Hazel said. That means that most cutting, even clear-cutting, allows the forests to come back. That, in turn, shrinks the relative carbon footprint of using North Carolina pellets for power production, he said.

But the forest watchdog group Dogwood Alliance says using the state's forests to produce pellets for power production is far from the European goal to be carbon neutral – producing no more carbon dioxide than is absorbed by regenerated forests.

But she also argued that pellet companies are limited in their ability to make money from selling to the United Kingdom.

"It is not a long-term strategy for (the companies)," Smith said. "This is not going to be a long-term development opportunity.

"The justification for this (pellet) market is emission reductions. When you burn a tree that is, say, 20 years old, all that carbon is going into the atmosphere. If that tree had not been logged it would have been storing that carbon plus absorbing more carbon from the atmosphere."

In other words, the forests just can't regenerate fast enough to make the harvesting-burning process carbon neutral, she added.

But the pellet-burning process is never going to be carbon neutral, Hazel said. It, however, can be relatively beneficial.

In the short term, burning pellets may be less advantageous than burning coal. But in the long term it looks good compared to coal, because the forests have time to regenerate, he said.

Regardless of the arguments, Keppler is confident in his company's and the pellet industry's course of high investment and growth.

Nothing, he reiterated, has changed in Enviva's ambitious plans for the Port of Wilmington.

<p>Energy policy changes across the Atlantic could affect how long the boom in the U.S. wood pellet industry will last, forestry experts and industry opponents say.</p><p>But the company that plans to invest millions into building a pellet-exporting facility at the Port of Wilmington says those changes were long anticipated and have provided certainty for the industry to continue rapid growth.</p><p>The United Kingdom, where North Carolina's pellets will be shipped, is changing some of its rules that favor use of pellets in place of coal. It is cutting out subsidies for new power plants that would burn pellets while eventually ending them for plants that are converting from coal to pellets, according to news reports. </p><p>The U.K.'s decisions "give certainty to the major utilities there so they can make good investments in converting existing coal-fired plants to biomass (wood products) plants," Enviva Chairman and CEO John Keppler said Monday.</p><p>"We have some pretty aggressive plans under way" for the Port of Wilmington and elsewhere in North Carolina, he said.</p><p>Enviva has two pellet-producing facilities in North Carolina, at Ahoskie and Northhampton, and has identified several sites in the state for a possible third facility, Keppler said.</p><p>Enviva plans to build two concrete storage domes, rail and truck unloading stations and a ship loader/dock-conveyer system at Wilmington. Enviva is not involved in pellet-exporting plans at the Port of Morehead City, which have been scaled back. The cutback is unrelated to European environmental policies, said Laura Blair, spokeswoman for the N.C. State Ports Authority.</p><p>U.S. production of pellets is expected to increase from 3 million tons in 2009 to 10 million by 2015, according to a study by Daniel Saloni of the Department of Forest Biomaterials at N.C. State University. </p><p>There are or will be six Atlantic ports handling wood pellets between Norfolk and Brunswick, Ga., according to the Southern Environmental Law Center, an environmental advocacy organization based in Charlottesville, Va.</p><p>Pascagoula, Miss., is joining the push, planning to spend $30 million to accommodate future pellet exports.</p><p>Viable business?</p><p>But some question the limits of the wood-pellet export boom.</p><p>Opponents of the industry are arguing that burning wood pellets to produce energy not only doesn't make environmental sense but that it eventually won't make economic sense, either.</p><p>In addition to the U.K.'s new biomass subsidy policy, Europe is looking at whether it will require stricter requirements that the wood it receives from the United States is third-party-certified as sustainable, according to Dennis Hazel, associate professor and extension specialist for the Department of Forestry and Environmental Resources at N.C. State University.</p><p>One of the largest certifying groups is the Forest Stewardship Council, which originated from the Rain Forest Alliance, Hazel said.</p><p>"If your forest is certified, every product" that comes from it is certified, including pellets, he said Monday.</p><p>Problem is, there is little third-party-certified land in North Carolina, Hazel said.</p><p>If Europe decides to require strict certification, it may cloud the long-term viability of the pellet industry in the state, he said.</p><p>Lack of certification by either independent or industry groups is not to say the state's forests are managed badly.</p><p>The U.S. Forestry Service thinks "we do forestry pretty well in the Southeast. Most of our land is adequately regenerated" after trees are cut, Hazel said. That means that most cutting, even clear-cutting, allows the forests to come back. That, in turn, shrinks the relative carbon footprint of using North Carolina pellets for power production, he said.</p><p>But the forest watchdog group Dogwood Alliance says using the state's forests to produce pellets for power production is far from the European goal to be carbon neutral – producing no more carbon dioxide than is absorbed by regenerated forests.</p><p>The alliance's executor director, Danna Smith, said burning pellets for electricity may actually increase carbon emissions compared to coal. </p><p>But she also argued that pellet companies are limited in their ability to make money from selling to the United Kingdom.</p><p>"It is not a long-term strategy for (the companies)," Smith said. "This is not going to be a long-term development opportunity.</p><p>"The justification for this (pellet) market is emission reductions. When you burn a tree that is, say, 20 years old, all that carbon is going into the atmosphere. If that tree had not been logged it would have been storing that carbon plus absorbing more carbon from the atmosphere."</p><p>In other words, the forests just can't regenerate fast enough to make the harvesting-burning process carbon neutral, she added.</p><p>But the pellet-burning process is never going to be carbon neutral, Hazel said. It, however, can be relatively beneficial.</p><p>In the short term, burning pellets may be less advantageous than burning coal. But in the long term it looks good compared to coal, because the forests have time to regenerate, he said.</p><p>Regardless of the arguments, Keppler is confident in his company's and the pellet industry's course of high investment and growth.</p><p>Nothing, he reiterated, has changed in Enviva's ambitious plans for the Port of Wilmington.</p><p><a href="http://www.starnewsonline.com/section/topic99"><b>Wayne Faulkner</b></a>: 3434-2329</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @bizniznews</p>